Earnings Call Transcript - MOMO Q1 2025

Operator, Operator

Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter 2025 Hello Group Inc. Earnings Conference Call. Followed by the number one on your telephone keypad. I would now like to hand the conference over to your first speaker today, Ms. Ashley Jing. Thank you. Please go ahead, ma'am. Thank you, everyone. Thank you for joining us today for Hello Group's first quarter 2025 earnings conference call. The company's results were released earlier today and are available on the company's IR website. On the call today are Mr. Tang Yan, CEO of the company, Ms. Zhang Sichuan, CEO of the company, and Ms. Peng Hui, CFO of the company. They will discuss the company's business operations and highlights, as well as the financials and guidance. We will all be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this call may contain forward-looking statements made under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict, many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties, and factors is included in the company's filings with the US Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under law. I'll now pass the call over to our COO, Ms. Johnson Trent.

Johnson Trent, COO

Hello, everyone. Thank you for joining our call. Q1 was a solid quarter and a good start to 2025. Next, I will review our strategic priorities for the years and provide updates on execution. Before getting into the financials, investors who have reviewed our Q1 earnings will notice that we have disclosed geographical breakdowns on revenue levels. Over the past few years, with the rapid development of overseas businesses, their revenue contribution to the group is getting increasingly prominent. In Q1, overseas revenue accounted for 16% of total revenue, up from less than 10% in Q1 2024. We expect this percentage to continue growing rapidly in the coming quarters. We believe that the geographical revenue breakdown helps investors better track our progress in our overseas development. Next, let's dive into the details of Q1. Starting with an overview of financial performance, for Q1 2025, total group revenue was RMB2.52 billion, exceeding the high end of our guidance and was slightly down 1.5% year over year. Domestic revenue reached RMB2.11 billion, down 9% year over year. Overseas revenue reached RMB415 million, with accelerated year over year growth of 72%. Adjusted operating income was RMB350 million, down 33% from Q1 last year, with a margin of 14%, down six percentage points from the same period last year. On the last earnings call, I outlined several key priorities for 2025. For Momo, our goal is to maintain the productivity of this cash cow business with a healthy social ecosystem. For Tantan, our goal is to improve its core dating experience and develop an efficient business model that drives profitable growth. As for the new endeavors, our goal is to continue deepening our presence in overseas markets, enriching our brand portfolio, and building a long-term growth engine. Since the beginning of the year, we have made strong progress across all three fronts. Let me walk you through the details. First, our Momo app. At the product level, we continue to optimize interactive features that facilitate users in making meaningful connections and maintaining interactions, with the goal of enhancing the social experience and stabilizing user base scale. As mentioned earlier, we have developed an in-house AI algorithm that generates personalized greetings for male users by analyzing the historical text or image posts of female users. Data shows that the response rate for AI-generated greetings is significantly higher than that of user-generated ones. Since we fully rolled out this feature, the response rate to greetings has continued to rise. On the user acquisition front, to ensure stable productivity of the cash cow business, in Q1, we targeted efficient channels with ROI below 80% and gradually terminated cooperation with underperforming ones. The average user acquisition cost narrowed slightly from last quarter, thanks to the improved channel efficiency and enhanced user onboarding and conversion capabilities. User retention remains stable despite a double-digit increase in user acquisition. A significant reduction in channel investment with a negative ROI has resulted in a substantial decline in long-term paying users. In Q1, the Momo app had 4.2 million paying users, a substantial decrease of 1.5 million. In summary, paying users generated by channels have relatively low engagement and spending. The absence of this group did not have much negative impact on overall user activity and revenue. Instead, it helped positively in improving overall profits. The continuously improving user acquisition ROI in the past two quarters has proved that such a strategy is very effective, and we plan to continue with this effort. Now on the productivity of the Momo cash cow business. In Q1, Momo's value-added services, previously known as live streaming and WaaS, were combined as value-added services from this quarter, resulting in total revenue of RMB1.78 billion, down less than 10% year over year. The decline level from last year is mainly due to the proactive demonetization operational adjustments completed by the end of 2024. We believe that the content ecosystem of the platform is now at a relatively satisfactory level. The annual decline was mainly attributed to spending witnessed among top-paying users caused by micro factors. We have introduced new operational events and gifting features tailored for mid-cohort users, as well as audio and video scenarios. We adjusted the recommendation algorithm in the chat room to better align with the social preferences of mid-cohort users, driving growth in penetration rates and user scale of the chatroom experience. Moreover, we launched new features to boost spending among mid-cohort users, which partially offset the revenue pressure caused by the decline of top-paying users and increased revenue contributions from chat rooms, which have a relatively lower revenue sharing ratio. Alongside the scaling back of revenue-oriented live streaming operational events, this has all placed a positive growth trajectory in stabilizing growth margin amidst revenue pressure. In recent years, the strategy of cost reduction and efficiency improvement combined with product adjustments has put the same pressure on Tantan's user base and revenue. To maintain profitability, we further reduced Tantan's marketing spend in Q1. The decrease in channel traffic has put some pressure on overall user scale. However, we are pleased to see that thanks to gradual improvements in the ecosystem and product experience, organic traffic primarily from returning users has continued to grow steadily, largely offsetting the decrease caused by reduced marketing spends. In March, Tantan's MAU was 10.7 million, a slight decline of 1% quarter over quarter. As of the end of Q1, Tantan had 800,000 paying users, a decrease of 60,000 from previous quarters. This was mainly due to the ongoing product upgrade which has improved user experience but has a short-term negative impact on paying conversion. While we are rolling out testing features to a larger pool of users, the paying ratio declined slightly from the last quarter. Turning to Tantan Financials. Revenue from the onshore business in Q1 was close to RMB170 million, down 19% year over year. The decrease was due to the decline in paying user accounts, whereas ARPU grew by double digits, partially offsetting revenue pressure. On the product front, in Q1, we wrapped up the product upgrade launched last year, focusing on enhancing user authenticity through scaled product testing, which further increased the user verification rate. On the channel front, our goal was to achieve 100% ROI, namely recover all fixed and variable costs, including labor, as we abandoned channels that could not be fully recouped. Overall, marketing spending decreased further from last quarter and average user acquisition costs dropped by double digits. Combined with minor product-driven improvements in the app, this led to significant sequential increases in user acquisition ROI. Currently, channel ROI has far exceeded 100%, which is key to achieving quarterly profit growth despite revenue pressure in Q1. On the commercial product front, to mitigate the revenue pressure caused by the declining paying users, we upgraded membership features to boost ARPU. At the same time, we increased promotion efforts to offset the negative impact of product optimization on paying conversion. As for the overseas business, in Q1, overseas revenue reached RMB415 million with accelerated year-over-year growth of 72%. This revenue accounted for 16.4% of total group revenue, up from 9.4% in Q1 2024. Over the past few years, our overseas revenue has mainly come from our voice-based social products in the MENA market. Social has maintained rapid growth. We believe, due to the fundamental nature of the social entertainment space and the diversified user experiences, in order to expand our market share in the near region, more effectively and efficiently, we need other brands in addition to Xochin. As we have accumulated more products and operational experience in the region, we built our local team and launched more independent brands in recent years to meet different online social entertainment needs. Growing from Soju's success, we have developed a playbook for the zero-to-one development of social entertainment. Since the beginning of 2025, we have wrapped up channel investment for new products. The ROI-oriented channel strategy has driven the revenue of new products to exceed our initial expectations. This is the main reason for the accelerated year-on-year growth of overseas revenue in Q1. Currently, the overseas revenue increment had largely offset the domestic revenue decline. In Q1, Show Cho generated high-risk revenue among these apps, bringing in close to RMB300 million, representing a year-on-year growth of nearly 40%. The growth was mainly driven by localized operations over the past years and improved cross-border collaboration between front and back-end teams, enabling SOCIAL to achieve satisfactory results in both expansion into new markets and the launch of new features. On a quarterly basis, revenue growth faced pressure due to political unrest in the Middle East at the end of last year coupled with Ramadan, during which users' spending sentiment was depressed. However, I am pleased to see that our team was able to adjust the operational strategy promptly to mitigate the negative impact of this uncertainty, which played a positive role in stabilizing revenue. Apart from search, our audio-based social game product YahaLand and voice-based social product Amaz have recently entered the monetization phase and delivered stable ROI since we increased marketing investment at the beginning of this year. As a result, we further increased marketing spend, which drives significant quarterly revenue growth for both products. Beyond assuming top-line growth, our team also focused on optimizing the revenue-sharing model and driving high-margin features revenue to improve overall gross profit. This effort lays a solid foundation for achieving operational breakeven. We are confident that the team will reach this goal by the year end. Our goal for the overseas market is not limited to social and entertainment products in the MENA region. Hologu is the operator of Asia's largest open social platform. We understand Asian users' preferences and pain points in discovering new relationships and building meaningful interactions better than other players in the market. Therefore, we are confident that we should play a key role in the global dating market. Currently, we have set up a team in Singapore with deep expertise in overseas dating operations and marketing. Moving forward, we expect to push harder on building a better dating experience and brands for users seeking romantic relationships. This concludes my remarks. Now let me pass the call to Kathy for the financial review. Kathy, please.

Kathy, CFO

Thanks, Vic. Hello, everyone. Thank you for joining our conference call today. Before getting into the financials, let me first outline the adjustments we've made to our disclosure practice starting this quarter. Number one, we've introduced a geographic breakdown of revenues to more accurately reflect the rapidly growing and increasingly significant overseas business. Number two, given that the line between live streaming and value-added services is becoming increasingly blurred and these two are really in subsistence of fee-based revenues where we directly charge the users for value-added services and in many cases, share part of the revenues with content providers, we've merged the two business lines into one, which we now refer to as value-added services. Number three, given that Tantan's revenue accounts for less than 10% of the group's total revenue, we've discontinued its segment recording. Now let me take you through the financial review. Total revenue for the first quarter 2025 was RMB2.52 billion, down 2% year on year and 4% quarter on quarter, exceeding the high end of our revenue guidance. Non-GAAP net income attributable to the company was RMB403.8 million compared to RMB59.9 million for the same period last year and RMB230.5 million from Q4 2024. In the first and last quarter of 2024, we had some one-off tax and impairment-related expenses excluding these special items. Net income for Q1 2024 and Q4 2024 would have been RMB508.5 million and RMB371.1 million respectively. Looking into the key revenue items for Q1, our total revenue from value-added services, which is the sum of revenues from former live streaming and VAS combined as salary added service from this quarter, was RMB2.49 billion, down 2% year on year and 4% quarter on quarter. On a user geography basis, VAST PRC mainland revenue was RMB2.08 billion, down 9% year on year and 7% quarter on quarter. The year-over-year decrease was caused by macro factors that put pressure on the Momo business and, to a lesser extent, the decrease in Tantan due to the decline in the number of paying users. The sequential decrease was due to negative seasonality. FAS overseas revenue came in at RMB413.1 million, up 73% year on year and 16% quarter on quarter. The year-over-year growth was driven by both the rapid expansion of Socho and the initial monetization of a few emerging brands. Turning to costs and expenses, non-GAAP cost of revenue for the first quarter of 2025 was RMB1.57 billion compared to RMB1.50 billion for the same period last year. Non-GAAP gross margin for the quarter was 37.9%, down 3.5 percentage points from the year-ago period. The year-over-year decrease was due to a number of factors: Number one, higher payout ratio, which was due to two factors: one, overseas business contributed a larger percentage of total revenue while having a higher payout ratio, especially during the first regional expansion and initial phase of live streaming service offering; and to a lesser degree, slightly higher payout from Momo app to incentivize the supply side. Number two, optimization of personnel, which led to an increase in one-off severance payments. Number three, payment channel costs and infrastructure expenses constitute a higher percentage of revenues as the revenue mix shifts toward overseas business, where these fees as a percentage of revenues are higher compared with the domestic business. Non-GAAP R&D expenses for the first quarter was RMB185.9 million compared to RMB183.4 million for the same period last year, representing a 1% increase year over year. The increase was attributed to severance payments associated with personnel optimization. Non-GAAP R&D expenses remained stable at 7% of revenue consistent with the figure from the previous year. We ended the quarter with 1,336 total employees compared to 1,375 from a year ago. The R&D personnel as a percentage of total employees for the group was 58% compared with 62% from Q1 last year. Non-GAAP sales and marketing expenses for the first quarter was RMB320.1 million or 13% of total revenue compared to RMB287.3 million or 11% of total revenue for the same period last year. The year-over-year increase was attributable to the increase in channel investments for the overseas apps, whereas marketing spend for the PRC mainland business narrowed due to Tantan's ongoing cost control strategy. Non-GAAP G&A expenses was RMB114.8 million for the first quarter, compared to RMB93.5 million for the same quarter last year, representing a 5% and 4% of total revenue, respectively. Non-GAAP operating income was RMB345.3 million with a margin of 13.7% compared with RMB515.0 million with a margin of 20.1% from the same period last year. Non-GAAP operating expenses as a percentage of total revenue was 25%, an increase from 22% from Q1 2024. Now briefly on income tax expenses. Total income tax expenses was RMB70.4 million for the quarter with an effective tax rate of 16%. In Q1, the company accrued withholding income tax of RMB12.9 million, which is 5% of undistributed profit generated by our WLO fee. Without the withholding tax, our estimated non-GAAP effective tax rate was around 13% in the first quarter. Now turning to balance sheet and cash flow items. As of March 31, 2025, Hello Group's cash, cash equivalents, short-term deposits, long-term deposits, and restricted cash total RMB12.79 billion compared to RMB14.73 billion as of December 31, 2024. The decrease in cash reserves was largely attributable to the repayment of RMB1.74 billion bank loan, including accrued interest. Net cash provided by operating activities in the first quarter of 2025 was RMB239.7 million. Lastly, on business outlook, we estimated our second quarter revenue to come in the range from RMB2.57 billion to RMB2.67 billion representing a decrease of 4.5% to 0.8% year on year. This is based on the assumption that on a year-over-year basis, PRC mainland business will decrease in the mid to low teens percentage while overseas revenue is expected to achieve more than 80% growth. Please be mindful that this forecast represents the company's current and preliminary view on the market and operational conditions which are subject to change. That concluded our prepared portion of today's discussion. With that, let me turn the call back to Ashley to start Q&A.

Operator, Operator

Thank you. Just a quick reminder before we take the questions. For those who can speak Chinese, please ask your questions in Chinese first and followed by English translation by yourself. Thank you. Operator, we're ready for questions.

Operator, Operator

If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Zhuking Zeng with CICC.

Zhuking Zeng, Analyst

Thanks, management for taking my question and congratulations on the strong quarter and the remarkable growth of overseas business. My question is about social. On the first quarter earnings call, the management mentioned that Sohrab achieved the ARPU with 52% revenue growth in 2024. I mentioned just now that's supposed to be year-on-year growth in Q1 last year. Apart from the high base, are there any other reasons causing a slowdown in revenue? Such as market competition, consumption, and other such? What does the management think about the revenue signing for social? And what's the cost of guidance before the SEARCH? Thank you.

Tang Yan, CEO

Indeed. Last year, Sogou achieved revenue growth by strengthening localized operations, expanding into new markets, and introducing video features. However, since the beginning of this year, revenue growth has slowed down a little bit. This can be attributed not only to a high base effect but also the political unrest in the Middle East at the end of last year, which dampened some users' consumption sentiment—a trend that continued into Q1 of this year. To mitigate the impact of the event-driven revenue pressure, we beefed up our efforts to acquire paying users through various channels and introduced new features designed to facilitate relationship building and improve user engagement. Enhancements in user experience have positively impacted retention. Additionally, during Ramadan, we organized several operational events that resulted in more stable user fluctuations compared to previous years. This helped in the rapid recovery of user activities and spending after Ramadan. As for the competition concerns just mentioned, although the Middle East hosts a rich variety of social entertainment products, the market remains highly fragmented. That's why we haven't experienced significant competitive pressure. Our resilience can also be attributed to our extensive experience in product development and operations within this sector. Last year, Sogou's revenue was close to RMB1 billion, and we believe it still has greater growth potential. However, to achieve this goal, we need to go beyond Sogou's current market penetration and product offering. This is precisely why we must continue to expand into new markets, deepen our presence in existing regions, and drive continuous product innovation. In terms of profit, Sogou has maintained solid earnings in recent years. However, during this phase of rapid revenue growth and ongoing efforts to enhance market penetration, we will not prioritize margin expansion. Instead, we will maintain strict control over channel return on investment as long as our user acquisition remains profitable. We will reinvest the incremental profit into user acquisition channels and strengthen localized operations. I hope that answers your question. Operator, please take the next one.

Operator, Operator

Thank you. Your next question comes from Ria Jiang with Deutsche Bank.

Ria Jiang, Analyst

Thank you. Let me translate myself. Thank you, management for taking my question. My question is also regarding the overseas business. In Q1, overseas revenue was over RMB100 million. And So Cho was close to maybe RMB300 million. Does that mean that the other two apps that started to monetize since last year have combined stayed a remaining RMB100 million in quarterly revenue? Could management share the growth plan of these two products and your estimation of overseas revenue this year? Thank you.

Zhang Sichuan, CEO

From a revenue perspective, Sohu is currently our largest and most successful overseas product. Our other two social entertainment products targeting the Middle East also achieved significant breakthrough progress at the end of last year and the beginning of this year. This was mainly driven by improved user retention and channel marketing efficiency, which leads to significant improvement in user acquisition ROI. We believe that both products are well positioned for rapid scaling and are expected to maintain strong growth momentum from the Q1 levels. In addition to these three social entertainment products, our overseas revenue also includes Tantan's overseas business. Tantan has always been a mainstream brand among overseas Chinese communities and in Southeast Asian markets. We established a strong overseas product operation team in Singapore last year, tasked with managing international dating products, including Tantan. We have always been very bullish on the prospects of dating products in overseas markets, particularly in developed regions. Hello Group hosts unique competitive advantages in this sector, and the dating market will be a key focus in our international expansion strategy. Overall speaking, we are very satisfied with the overall performance of our overseas business. Undoubtedly, the proportion of revenue and profit from overseas operations will continue to increase, and it will soon become a true growth engine for the group. As for our revenue expectations for the overseas market this year, Cassie can provide more details.

Peng Hui, CFO

Let me take the more quantitative question on the overseas revenue outlook. This is the first quarter where we've broken out overseas versus domestic revenue, and I think it's an important milestone in understanding our global growth trajectory. I'm going to address this question from several perspectives. Firstly, if you look at where the overseas revenue comes from, in Q1 2025, overseas revenue accounted for 16% of total revenue. Within this overseas piece, SOCIAL remains the largest contributor, making up approximately 60% to 70% of our overseas revenue in Q1. The second largest contributor is the overseas piece of Tantan, which is primarily a subscription-based dating product. That piece contributed around 10% of the overseas revenue. Beyond these two, we also have several emerging brands like Yohan, Amar, and others that make up the remaining share. Together, this portfolio approach under the Hello Group umbrella has driven robust growth internationally. In terms of growth dynamics in different sectors, we see two major forces behind the over 70% year-over-year overseas revenue growth. First of all, the social entertainment market in the Middle East and North Africa, which we call MENA, area, has been a major opportunity. While there are some more established players in the region, the market is large and diverse enough to support multiple platforms. Our entry to the MENA market through brands like Socho, Yahala, and Amar has been informed by years of product iteration and operational learning. Over the past few years, we've developed a playbook from launching all the way to scaling that we can replicate across different brands in that region. This matters because MENA is not a single uniform market. It spans multiple countries, demographics, and user behaviors. For example, what works in the Gulf countries may not work in North Africa. So having a modular portfolio-driven strategy and the operational agility to localize quickly has been a significant advantage for us. That playbook is now a real asset. Other than the social entertainment opportunities in the MENA area, our growth path will also be increasingly driven by the overseas dating market as well. The overseas dating market, particularly through Tantan, is starting to turn a corner. Tantan's performance had been uneven in the past as we tried to balance between dating and more entertaining features like live streaming and chat rooms. What we've learned especially over the last year is that users, particularly in more developed markets, want to focus on an authentic one-to-one dating experience. As a result, we've refined the product strategy to prioritize coordinated functionality while slimming down the more progressive entertainment features. We've also made structural changes by relocating global marketing and operations for dating to Singapore. The Singapore team brings deep experience and expertise in running international dating platforms, and it's already proven effective. Combined with China's world-class engineering capabilities, especially in product iterations, we now have both the local insight and the engineering horsepower to compete globally. We believe this positions us well to scale our dating brands across international markets. I hope this elaboration gives you a clear backdrop to understand the reason for the rapid growth of our overseas business. Now let me give you the numbers. As you can see, social grew by 38% year-over-year in Q1. The rest of the overseas portfolio, including Tantan, Yahaland, Amar, and others, grew at a triple-digit rate. This drove total overseas revenue growth of over 70% year-over-year in Q1. Looking ahead to the coming few quarters, we expect overseas growth to see further acceleration even beyond this 70% level. This growth will increasingly be driven by non-social brands thanks to the dual engine of social entertainment in MENA and the rebound of our dating business. We believe this combination gives us strong momentum and diversified exposure across several high-growth segments internationally. I hope this addresses your question. And now back to Ashley for more questions.

Ashley Jing, COO

Hi, operator. Please go ahead with the next question.

Operator, Operator

Your next question comes from Thomas Chong with Jefferies.

Thomas Chong, Analyst

Thanks management for taking my question. We actually have a Momo and Tantan undergoing a lot of changes in 2024. How should we think about the 2025 outlook, and how should we think about the China revenue for this year? Thank you.

Zhang Sichuan, CEO

For mature brands like Momo and Tantan, our goal is to maintain the productivity of this cash cow business with a healthy social ecosystem. However, for social brands that have been around for over a decade, maintaining fundamental social metrics is no easy feat. So our product team has put considerable efforts into using new technologies to enhance users' social experience. For example, as mentioned earlier, we provide male users with our self-developed AI tools to analyze the historical posts of female users and generate personalized greeting messages. This is a very practical social tool for Asian males who are not very adept at initiating conversations. If the male users feel that the content and phrases generated by AI do not match their personality and style of expression, they can request the AI to continuously adjust the greeting messages until they are satisfied. We have now replicated this technology in Tantan, allowing more users who are eager to find dates but lack certain skills to benefit from it. Since the beginning of the year, enhancement in product operations and matching algorithms have driven year-on-year and sequential growth in several key metrics of the Momo social ecosystem. These include retention rates, the number of two-way chats, and the female ratio, all of which reflect increased user engagement. A stable and highly engaged user base forms the cornerstone that allows our cash cow business to sustain its profit. Regarding Tantan, we implemented further cost efficiency measures in both channel investments and personnel expenses in Q1. The ROI improvements brought by reduced marketing spends have far exceeded our expectations, creating greater operational flexibility for continuous product experience optimization. As for this year's domestic revenue performance, I will leave Cassie to address those details.

Peng Hui, CFO

In Q1, Mainland China's revenue declined by high single digits on a year-over-year basis. For Q2, we are guiding to a year-over-year decline in the low teens percentage. Looking at the full year, we expect the decline rate to remain roughly in line with the first half, which translates to a 10% plus minus year-over-year decrease for the full year for the domestic piece. This represents a significant narrowing from the high teens year-over-year decrease that we saw in 2024 versus 2023, which shows continuous stabilization of the domestic business. Now let me briefly review the primary factors that drive our domestic business trajectory, so you can put our estimation into perspective and maybe form your own view about how things may play out in the second half of 2025. Firstly, macro sentiment remains a swing factor. Momo's revenue is heavily tied to value-added services, particularly virtual gifting, which depends on discretionary entertainment spending of higher-income users. Spending sentiment among this group is closely linked to their personal financial outlook, which in turn tracks with macroeconomic indicators, often influenced by how the equity market is performing. In Q1, what we saw was a short-term boost around Chinese New Year supported by some optimism in the equity markets. However, as we enter into Q2, macroeconomic and geopolitical uncertainties, such as tariffs, began to resurface. But for now, sentiment appears stable, and our Q2 guidance reflects that. That said, the outlook for the second half will still depend heavily on broader macro developments. The second big factor here is the regulatory environment. On that front, we've seen meaningful improvement in the regulatory landscape over the past few quarters. With that stability, we've shifted from a defensive risk management posture back to normal product development operational execution. Other than the macro and the regulatory drivers, the third factor that impacts our domestic revenue performance is the new strategy and restructuring of the domestic part of Tantan's business as I explained earlier. Starting in March 2025, we made a strategic decision to sharply reduce marketing and personnel expenses on the domestic side of Tantan. The goal here was to improve the ROI of our user acquisition efforts and support profitability for Tantan's domestic business. Naturally, the cut in spending will have a negative impact on Tantan's top line. However, we are now seeing significant improvements in ROI of our user acquisition efforts, indicating that the decline in the client top line caused by these cuts was mild and manageable. This came as a pleasant surprise for us. For Tantan's domestic business, we also expect the year-over-year decrease to narrow down from what we saw in 2024, and we expect the bottom line to perform much better than what we saw last year. Lastly, I would like to highlight the group-level performance: Our Q1 revenue showed only a slight year-over-year decrease of a couple of percentage points. In Q2, we are guiding a similar level of decrease year-over-year. However, with the continuous stabilization of the domestic business and the acceleration of growth from overseas business, it's possible that we will see the group level top line turn into positive growth in the second half of the year. If that happens, it would represent a major structural turning point for us. Well, I hope this addresses your question.

Ashley Jing, COO

That's it for today. Thank you for joining us. See you next quarter.

Operator, Operator

That does conclude our conference for today. Thank you for participating. You may now disconnect.